Gold prices zoom to Rs 31K/10 gm as rupee, stocks dive

Gold on Thursday surged by Rs 1,310, the biggest rise in two years, to reclaim Rs 31,000 per 10 gram level in Delhi, with stocks and rupee plunging on fears government may move to capital control regime.

Gold prices jumped to Rs 31,010 per 10 grams, a level not seen since February this year, on strong demand from stockists ahead of festive season, after RBI prohibited inward shipment of gold coins, medallions and dores without licence.

This is the biggest single-day surge since on August 19, 2011, when the metal had risen by Rs 1,310.

The precious metal soared by Rs 1,195 to Rs 31,160 in Kolkata. It rose by Rs 1,115 to Rs 30,810 per 10 gram in Chennai and by Rs 1,155 to Rs 30,830 per 10 gram in Mumbai.

"Gold is back in demand as falling rupee and melting equities left no place for investor to park their funds," All India Sarafa Bazar vice president Surender Jain said.

Restricted supply after government increased import duty on the metal to 10 % on August 13 and firm global cues supported the upsurge in the metal, traders said.

Silver also followed suit and spurted by Rs 3,270 to Rs 49,320 per kg, its highest level this year on rising demand from industrial units and coin makers.

The latest measures by RBI and government are part of the series of steps taken to curb gold import, the single biggest contributor to the widening current account deficit.

Stock markets crashed by nearly 4 % and the rupee dipped below the 62 level against dollar for the first time today amid fears the government may move to a capital-control regime to curb forex volatility and narrow CAD.